Private equity major Carlyle Group is doubling down on Indian brokerages as it bought 3.85 per cent in Edelweiss Financial Services from the open market on Friday (October 28). The private equity firm acquired the shares for Rs 85.9 crore in a bulk deal on the National Stock Exchange.

The development comes after Carlyle has raised its exposure to brokerage and financial services firm India Infoline (IIFL) to 9 per cent through secondary market purchase of equity shares earlier this month.

Carlyle has also said in a statement that it will join the board of India Infoline, although it remains to be seen if this becomes the case with Edelweiss too. The India Infoline deal was carried out by Carlyle’s buyout team.

Carlyle acquired all the shares held by Reliance Growth Fund for Rs 29.50 per unit, a 7-8 per cent premium to Friday’s closing price of Rs 27.5. The shares of Edelweiss closed at Rs 26.6, down 3.27 per cent in a Mumbai market down 0.56 per cent.

Carlyle joins the list of Edelweiss’ PE backers that includes Singapore’s GIC (8.23 per cent through Heliconia Pte), Greater Pacific Capital (5.15 per cent), Argonaut Ventures (1.54 per cent) and Sequoia Capital India (1.03 per cent).

Rashesh Shah-led Edelweiss Financial Services has recently changed its name from Edelweiss Capital in order to reflect its expanding business presence to areas like insurance and housing finance. Edelweiss has also expressed its desire for a banking licence besides building up 4.9 per cent stake in Catholic Syrian Bank Ltd, a Kerala-based private sector lender.

For Q2FY12, Edelweiss Financial Services reported a flat total revenue growth at Rs 385 crore with profit after tax falling 21 per cent to Rs 26 crore, compared to Q1FY12. Slowdown in capital markets, investments in new life insurance and retail business and depreciation in new office property impacted PAT by Rs 12 crore in Q2, according to the company. Over 73 per cent of the revenues come from credit business and treasury operations while the rest comes from broking, i-banking, asset management and distribution.

The company has recently formed Edelweiss Tokio Marine Life Insurance, a joint venture with Japan’s Tokio Marine. The company started with Rs 550 crore in capital and opened 19 branches in 14 cities across Gujarat, Maharashtra, Delhi, Haryana, Punjab and Chandigarh. Edelweiss’ housing finance business, launched last year, has also built a loan book of Rs 350 crore.


Carlyle Raises Holding In India Infoline To 9%

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